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A Taiwanese-owned garment maker on Thursday postponed its planned Cambodia listing by two weeks, in yet another delay to what would be just the second initial public offering to be held in this developing Southeast Asian nation.

Grand Twins International (Cambodia) PLC now plans to list on June 12—postponing its trading debut set for Thursday—after public holidays caused delays in finalizing the results of its $19.3 million flotation, the IPO's sole underwriter Phnom Penh Securities said in a statement.

The Cambodia-based garment maker sold eight million shares, or 20% of the company, at $2.41 apiece in its IPO, which was oversubscribed, Phnom Penh Securities said. The price is below the midpoint of the indicative range of $1.85 to $3.50 a share.

Interest in the Grand Twins offering has been hurt by concerns over the prospects of Cambodia's garment industry, which has been hit by labor unrest and rising costs, analysts and brokers said.

Thursday's postponement was the second time Grand Twins delayed its publicly announced listing date. The company first set its trading debut for May 8, before pushing it back by three weeks due to delays in getting regulatory approval.

Underwriters and brokers have expressed hope that the Grand Twins IPO could rejuvenate Cambodia's stock market, which has foundered since hosting its first-ever listing in April 2012, the $20 million flotation of state-owned Phnom Penh Water Supply Authority.

Two other state-owned enterprises, a telecommunications firm and a port operator, were slated to list by the end of 2012, but those plans were shelved.

Other IPO candidates have either struggled to meet regulatory requirements or have decided to hold off until the market gains depth and liquidity. Grand Twins, for instance, had considered listing as early as 2012 but put it off due to compliance issues and concerns about market liquidity, its IPO underwriter had said.

Grand Twins, whose primary customer is German sportswear firm Adidas AG ADS.XE -0.56% , had $54.9 million in revenue in 2012, mainly from apparel exports to retailers in Europe and the U.S.

Tens of thousands of garment workers in Cambodia went on strike from late December until early January to press for higher wages, and unions have threatened fresh job actions unless labor officials raise the industry minimum wage to $160 a month--$60 more than the government's latest offer.

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Other IPO candidates have either struggled to meet regulatory requirements or have decided to hold off until the market gains depth and liquidity.

GTI price drops on day one
Tue, 17 June 2014
Eddie Morton
After a five-month IPO process steeped in anticipation, Grand Twins International ended its first day on the Cambodia Securities Exchange (CSX) with results many observers found disappointing.

GTI shares opened yesterday’s session at 9,700 riel ($2.41), with a ceremonial bell ringing at the CSX’s head office. The stock had fallen 4.9 per cent to 9,220 riel ($2.28) when trading ended four hours later at 1pm.

Trading volume for the CSX’s newest arrival remained modest, with just over 3,100 shares changing hands.

GTI’s day one decline comes in stark contrast to the Phnom Penh Water Supply Authority’s (PPWSA) first day of trading in April 2012, when the firm’s stock rose 48 per cent from the initial IPO listing price of 6,300 riel ($1.56), to close at 9,300 riel ($2.30).

Stephen Hsu, CEO of Phnom Penh Securities (PPS), the chief underwriting firm, expressed concerns over the first day’s result.

“Investors still do not have enough confidence in this market,” he said.

Hsu said PPS would look to set up measures to allow the underwriter to stabilise the newly listed stock.

“For stabilising the price, I think the regulation for a greenshoe option should be set up,” he said.

The greenshoe option – named after the company that first used the method – allows underwriters to intervene during the first 30 days of a stock’s trading by selling up to 15 per cent more shares at the initial listing price in an effort to stabilise the price.

But regulations allowing underwriters to intervene in that fashion have yet to be drafted by the Securities and Exchange Commission of Cambodia, Hsu added.

Soleil Lamun, deputy director of market operations at the CSX, said the stock’s downturn was unexpected.

“It is more surprising to us. Personally, I expected the price to stay around the IPO listing,“ he said. “I didn’t expect people would sell at a loss the shares they bought during the IPO.”

Svay Hay, CEO of Acleda Securities, was more circumspect, saying GTI’s day-one decline was marginal and did not justify the rapid employment of stabilisation measures.

“It is a very small decline. Investors in GTI are looking at the stock long term, while newcomers will likely wait for a few days to see where the price stabilises naturally before buying in,” he said.

The CSX, like most exchanges, has price stabilisation measures in place limiting fluctuations on the first day of trading to as low as 90 per cent of the initial listing price, and as high as 150 per cent. Fluctuations are limited to a mere 5 per cent up and down every day after the first session.

Officials from the Ministry of Economy and Finance, the CSX and GTI gathered at the local bourse this morning to launch the new listing. Hean Sahib, chairman of the CSX and secretary of state for the ministry, was hopeful that more privately owned companies would follow GTI’s example and consider listing publicly.

“With this new listing of GTI, I hope to see the number of listed companies to keep increasing in the near future,” he said.

Soi Dog wrote:How is that water stock fairing since its debut?